Updated from 11:46 a.m. ET

The stock market enjoyed a (very) modest relief rally Tuesday but there was no reprieve for oil prices. Brent crude slumped 4.4% to $85.02 per barrel, the lowest levei since 2010; the global benchmark is down 22% year-to-date. Meanwhile, West Texas Intermediate slumped 4.6.% to $81.79, the lowest level since 2012.

Today's decline appears to have been triggered by the International Energy Agency's cutting its demand forecasts for 2014 and 2015 by 200,000 and 300,000 barrels per day, respectively. The IEA cited both supply and demand factors in lowering its estimates, a nod to the deadly combination (for energy prices) of increased global production during a time of decelerating global growth.

Furthermore, the energy watchdog says "most [production] remains profitable at $80 a barrel Brent," suggesting "further oil price drops would likely be needed for supply to take a hit – or for demand growth to get a lift."

This is good news for pretty much everyone other than energy producers and their shareholders. One proxy of energy stocks, the Energy Select SPDR ETF (XLE), is down more than 15% in the past three months, more than triple the S&P 500's (^GSPC) decline in the same timeframe. Weakness in energy stocks like Chevron (CVX) and ConocoPhillips (COP) weighed on the S&P 500, which finished well off the morning highs.

For consumers, this means the recent decline in gasoline prices is likely to continue. The U.S. average price for a gallon of gas is currently $3.18, according to Gas Buddy; but average prices in 9 states are already below $3 and experts predict the national average will soon follow suit. Prices are falling so fast that "gas price wars" are breaking out in parts of Massachusetts, The Boston Globe reports.

Gasoline as a share of Americans' disposable income has fallen in recent years, thanks largely to more fuel-efficient vehicles, telecommuting, urbanization and other macro factors. Gas as A percent of median income is current 3.73%, up from around 2% in the late 1990s-early 2000s, but down from over 6% in 1980, according to GAMCO.

Given stagnant wages and rising costs for other staples -- most notably housing, healthcare, education and childcare -- any savings due to lower gas prices will be most welcomed by cash-strapped American households. Every 10-cent drop in the price of gasoline translates into $120 of annual savings for the average American household, The NYT reports.

The Enemy of My Enemy

Moving from economics to geopolitics, one critical backstory to all this is the apparent split within OPEC, which is still responsible for about one third of global production. Saudi Arabia has pledged to keep production levels high and recently cut prices to European and Asian buyers, despite the recent decline in prices. Kuwait, Iraq, Iran and the UAE have followed the Saudis' lead while Venezuela is calling for a special meeting to discuss prices and Iran is calling for production cuts, The Times reports.

A few theories here to explain the thinking behind what the Arab producers are doing:

• Taking the long view, the Saudis are trying to crimp America's fracking revolution by driving prices down to where it becomes uneconomical for many producers. Some experts said production would slow after WTI broke $90 but The Times says "companies that have led the boom in drilling across North Dakota and Texas are insulated from the declines for the time being, with the break-even levels for investments around $60 a barrel."

• America and the Saudis have a common enemy in the Islamic State, aka ISIS. In exchange for American military support against ISIS, the Obama administration got Arab oil producers to promise to keep production high and prices low. In addition to helping U.S. consumers, this has the added benefit of putting additional pressure on Vladimir Putin's regime, which is overwhelmingly reliant on energy.

I have no way to prove (or disprove) either of those theories but they make intuitive sense to me. If anyone has evidence to support, or counter, I'd love to hear it. And if nothing else, I hope the White House is smart enough to see both the near-term rewards and long-term risks of "playing ball" with the Saudis.

Aaron Task is Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at [email protected].